Marijuana

We’ve written before about the intersection of legal ethics and marijuana, focusing on counseling business clients in the marijuana space. But two recent disciplinary cases caught my eye, each involving a lawyer’s personal marijuana use, and they highlight interesting issues.

Fitness to practice?

The first case involves an Illinois-licensed lawyer who lived in both Michigan and Illinois, and although the case is still at the pleading stage, it raises the question of what kind of criminal conduct reflects adversely on a lawyer’s honesty, trustworthiness or fitness to practice, so as to violate Model Rule 8.4(b).

Under Michigan law, the lawyer was a “qualifying patient” and therefore able to legally possess 2.5 ounces of marijuana for medicinal purposes. The lawyer’s girlfriend was licensed as the lawyer’s “primary caregiver” under the same law, and therefore she was allowed to possess up to five ounces of marijuana and grow up to 24 marijuana plants.

In his answer to a complaint filed by the Illinois disciplinary commission, the lawyer did not contest: that from June 2012 to December 2013, his girlfriend grew more than 24 plants in the garage of the rented home they maintained in Michigan; that she also manufactured marijuana products and sold them to third parties; and that he had knowledge of her manufacture and sale of marijuana and provided “informational and financial assistance” to her operation.

According to the Commission’s complaint, law enforcement’s search of the Michigan garage found more than 100 marijuana plants. In his answer, the lawyer denied that he knew of his girlfriend’s expanded grow operation before then.

The lawyer initially pled guilty to conspiracy to manufacture marijuana and was placed on deferred probation, which he completed; he then pled to a misdemeanor charge for maintaining a drug house, and the conspiracy charge was dismissed.

Many kinds of illegal conduct reflect adversely on fitness to practice law, such as offenses involving fraud … However some kinds of offenses carry no such implication… Although a lawyer is personally answerable to the entire criminal law, a lawyer should be professionally answerable only for offenses that indicate lack of those characteristics relevant to law practice.

Examples of offenses indicating such a lack: those involving “violence, dishonesty, breach of trust, or serious interference with the administration of justice.”

The disciplinary complaint charges that the lawyer’s criminal offenses violated Rule 8.4(b); the lawyer neither admitted nor denied the legal conclusion. So — the issue has been joined, and it is one that will likely come up with increasing frequency as state-legalized medical and even state-legalized recreational marijuana use spreads.

Legal services in exchange for marijuana

The second disciplinary case involves a Louisiana lawyer charged with trading legal services for marijuana. As described in the state supreme court’s opinion, a confidential informant told the sheriff’s office that she had paid her lawyer with dope on previous occasions, and he had told her that if she needed more legal help in the future, they could work out the “same old same old,” meaning payment in marijuana, or in drugs plus cash.

A sting was set up, in which the client-turned-informant told the lawyer she needed his help with criminal charges against her son, and that she had a “crap load of smoke” and a “backpack full of marijuana.” They met in a car, under police surveillance, and bargained over the amount of an additional cash payment. The lawyer then asked about “the other thing. [T]hat’s what I am most concerned about.” The client handed over a backpack with a half-pound of marijuana, worth $2,500, plus some marked cash.

Shortly after that, in front of his law office, law enforcement pulled the lawyer over for a traffic violation and arrested him.

Two weeks later, after news stories circulated about the incident, the lawyer self-reported his arrest to disciplinary authorities, and went into rehab. He was diagnosed with alcohol and cannabis dependence and unresolved grief and depression stemming from his father’s death two years earlier. He testified that the arrest was the best thing that could have happened to him, because he was finally forced to confront his addictions and get sober.

The interesting thing about this case is the disciplinary outcome on the charge of violating Louisiana’s version of Model Rule 8.4(b). The lawyer admitted the rule violation, was remorseful, cooperative, and in compliance with a five-year contract with the state lawyer-assistance program, which required AA meetings, drug screens, and monthly sobriety reports to a monitor. The diagnosis of addiction was not contested. There was no testimony that the lawyer neglected client matters before or after his arrest.

The initial hearing panel recommended a one-year suspension, fully deferred on condition of no further misconduct. The review board instead recommended a two-year fully-deferred suspension.

But the court rejected both of these recommendations, and instead issued an actual one-year suspension, with no deferment. The court wrote that the fact that “respondent bartered his legal services for illegal drugs” “directly implicat[ed] the practice of law and caus[ed] harm to the legal profession.” The court also found that there was “potential harm to his clients and the public.”

In contrast to the Illinois case, the Louisiana lawyer’s conduct was not just unlawful; the court drew a direct connection between the drugs and the lawyer’s practice, since he admittedly collected his legal fees in marijuana.

The smoke might eventually clear for Ohio lawyers who hope to help clients engage in the medical marijuana industry after it becomes legal in the state on September 8. On August 17, the state supreme court said that it had “directed its staff to prepare a draft amendment to the Ohio Rules of Professional Conduct that would clarify the services attorneys can offer clients seeking to comply with the state’s new medical marijuana law.” The announcement follows the non-binding ruling 12 days earlier by the state’s Board of Professional Conduct that Ohio lawyers can’t provide any legal services to help clients in connection with a medical marijuana enterprise.

Board: Medical marijuana “Yes,” legal services, “No.”

In contrast to Ohio’s upcoming state law, federal law designates marijuana as a Schedule I controlled substance, making its use for any purpose, including medical applications, a crime. Coincidentally, on the same day that the Ohio board issued its ethics opinion, the U.S. Drug Enforcement Agency declined to revisit the Schedule I designation. Since 2013, however, the U.S. Department of Justice has had the general policy of not interfering when marijuana is used medically under state law.

The disconnect between the federal and state law on marijuana is what creates the ethics problem for Ohio lawyers, said the Board.

Ohio Professional Conduct Rule 1.2(d) prohibits assisting a client who engages or seeks to engage in conduct the lawyer knows to be illegal. And according to the Board, the rule “does not distinguish between illegal client conduct that will, or will not, be enforced by the federal government.” If the legal services to be provided can be construed as assisting the client in violating federal or state law, the lawyer is barred from providing them to the client.

The Board was “mindful that the current state of the law creates a unique conflict for Ohio lawyers,” and makes it impossible for some clients to get legal services in an area deemed lawful by the Ohio legislature. But any remedy, the Board said, must come via amendment of Rule 1.2 by the state supreme court.

Now, just 12 days later, the court will launch a process that will possibly result in such an amendment.

Paths of other jurisdictions

Unlike Ohio, some other bars and states have used ethics opinions to hew a path for their lawyers to help clients who want to work in the marijuana space. As we wrote last summer, the San Francisco bar association gave the green light to lawyers to advise marijuana businesses — precisely because of the divergence between state and federal law. “Assisting the client who wants to comply with state and local laws is not the same as advising the client to violate federal laws,” said the S.F. bar ethics committee. (Importantly, California’s Rule 1.2(d) differs slightly from the analogous Model Rule.)

Other states have taken the approach that Ohio will now consider, by amending their rules. In 2014, the Nevada Supreme Court amended its Rule 1.2 to add a comment expressly permitting lawyers to counsel a client “regarding the validity, scope, and meaning of” the state’s medical marijuana statute, and to “assist a client in conduct that the lawyer reasonably believes is permitted.” Public comment and hearings on further proposals to amend the black letter rule are scheduled for later this year.

Other state ethics boards, like Ohio’s, have expressed a desire to have the state supreme court clarify the ethics murk with an express rule amendment; but unlike Ohio, some have given lawyers a qualified go-ahead in the meantime. The Illinois State Bar Association’s 2014 advisory opinion said that “the provision of legal advice to those engaged in nascent medical marijuana business is far better than forcing such businesses to proceed by guesswork,” and that providing legal services to such clients is “consistent with the Rules of Professional Conduct.”

We discussed both the seemingly inevitable grassroots movement toward legalization, but also the fact that the bars of several states had come to contradictory conclusions on attorneys’ ability to assist clients in grass-related business ventures, given that growing, possessing and selling it was still a violation of federal drug laws. We also later told you about another state bar coming to a similar conclusion.

Now another new opinion seems to be taking a slightly different and more liberal (if not enlightened) approach. Last week, in keeping with its city’s counterculture image, the Bar of San Francisco issued an opinion supporting an attorney’s ability to counsel clients in this burgeoning area.

Though it may have very limited precedential value (the opinion cautioned that the State Bar’s Office of Chief Trial Counsel and U.S. Attorneys may disagree with the interpretation), the opinion is notable for taking a slightly more client-centric (and well-reasoned) approach to the issue.

In its Opinion 2015-1, the S.F. Bar noted that the request was “terra incognita.” “We know of no other area in which a lawyer may be asked to represent a client in a matter that is legal under [state] law, but illegal under federal law.” Nonetheless, the Bar concluded that:

A California attorney may ethically represent a California client in respect to lawfully forming and operating a medical marijuana dispensary and related matters permissible under state law, even though the attorney may thereby aid and abet violations of federal law. However, the attorney should advise the client of potential liability under federal law and relevant adverse consequences and should be aware of the attorney’s own risks.

To reach its conclusion, the Bar first concluded that federal drug laws were not intended to preempt state laws because (in its view) there is not “a positive conflict” between California laws permitting medical marijuana and federal laws prohibiting it.

Once it cleared that little hurdle, the Bar focused on the fact that like any other business venture permissible under state law, a client that embarks on a medical marijuana venture may need a lawyer’s advice and assistance on numerous issues. That need is even greater when addressing matters that potentially violate federal law.

Among many other things, a client may need to know who can and can’t grow or possess marijuana and in what quantities; what is permissible compensation; what issues will arise with financing marijuana related business through federally chartered institutions; the client may need assistance negotiating a lease, drafting contracts or dealing with zoning.

The Bar found that, in view of these legitimate needs for legal advice, the Rules of Professional Conduct should not be used to discipline lawyers who satisfy that need. The Bar noted that one of a lawyer’s duties is to support both the laws of the United States and of California. The opinion noted that the duty of a lawyer “is to further the interests of his clients by all lawful means, even when those interests are in conflict with the interests of the United States or of a State.”

“What is a lawyer to do when those laws conflict? We believe that the lawyer may advise, assist, and represent the client in complying with state and local laws and ordinances while, at the same time, counseling against conduct that may invite prosecution for violation of federal laws.”

The opinion concludes that, by telling the client about the risks, but concurrently assisting the client to carry on a business that is expressly permitted by California law, the lawyer would be fulfilling his or her ethical duties to the client. “[T]here is a responsibility on the bar to make legal services available to those who need them.”

The opinion also notes that its analysis is under California’s ethics rules, which differ from lawyers’ duties in a state that has adopted American Bar Association Model Rule 1.2(d), which does not just prohibit a lawyer from advising a client to violate the law. (“A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent…..”).

The analogous California rule does not expressly proscribe assisting a client in conduct that the lawyer knows is permissible under state law, but criminal under federal law.

Of course, the Bar noted that a lawyer could not “advise the violation of any law . . . unless the member believes in good faith that such law . . . is invalid,” but noted that assisting a client who wants to comply with state and local laws is not the same as advising a client to violate federal laws.

Importantly, lawyers were advised to tell the client if a proposed activity would violate federal laws and of the associated risks. It also counsels lawyers that engage in these services to provide a number of other cautions, including regarding issues surrounding the confidentiality of communications over illegal activities.

Is this another sign of things to come, or just some California dreaming from the Golden Gate? Only time will tell….

We posted here in July about the legal ethics aspects of representing clients involved in the marijuana industry.

Now comes an ethics ruling from North Dakota about a lawyer’s own use of medical marijuana. The lawyer, living in North Dakota and licensed there, has a medical condition that qualifies the lawyer for medical marijuana treatment under Minnesota law. North Dakota has no medical marijuana law. The lawyer asked the ethics committee whether the lawyer could move to Minnesota and obtain marijuana treatment there while continuing to have a North Dakota law license.

“No go” in North Dakota

In Opinion 14-02, the ethics committee said “No,” advising that the lawyer would be violating the state’s Rule 8.4. The rule provides that it is professional misconduct for a lawyer to “commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects[.]”

Because using marijuana for any purpose, even a medical one, is a crime under federal law, the ethics committee advised that if the lawyer “purchased, possessed or ingested marijuana in Minnesota, the attorney would be violating federal law each and every time [the lawyer] did so.” See21 U.S.C. § 812(a) (listing marijuana as Schedule I controlled substance); U.S. v. Oakland Cannabis Buyers’ Coop. (federal Controlled Substances Act has no medical necessity exception for marijuana). That conduct would signify that the lawyer was engaging in a pattern of repeated offenses “that indicates indifference to legal obligations” and that would constitute a violation of Rule 8.4.

The North Dakota ethics committee also pointed to the supremacy of federal law, citing the state supreme court’s recent rejection of two criminal defendants’ claims that Washington medical marijuana prescriptions provided a defense to controlled substance crimes. SeeState v. Kuruc (state law that conflicts with federal law is without effect; ruling otherwise would mean that North Dakota would have to “recognize out-of-state marijuana prescriptions even though the same exact prescription cannot be made legal for its own citizens.”).

Colorado: lawyers can ethically use

North Dakota is just the second state to consider a lawyer’s own personal use of marijuana and whether it violates ethics rules. Two years ago, Colorado Ethics Opinion 124 held that a lawyer’s own use of medical marijuana, as legalized under state statute there, “does not necessarily violate [Rule] 8.4(b),” even though the conduct “may constitute a federal crime.”

In contrast to North Dakota, the Colorado ethics committee saw no “nexus” between the lawyer’s use of medical marijuana and the lawyer’s honesty, trustworthiness or “fitness as a lawyer in other respects” within the meaning of the state’s version of Rule 8.4, as long as the lawyer was complying with Colorado law. And last year, after Colorado decriminalized recreational marijuana use, the state ethics committee issued an addendum to Opinion 124, extending the reasoning to cover a lawyer’s recreational use of the drug.

Colorado judges are another story

But illustrating how the marijuana issue can tie regulators up in knots, Colorado’s Judicial Ethics Advisory Board concluded earlier this year that a Colorado judge cannot use marijuana for either medicinal or recreational purposes without running afoul of Rule 1.1 of the Colorado Code of Judicial Conduct. The rule provides that a judge must comply with the law, and that violating a criminal law constitutes such a violation, “unless minor.” Marijuana use of any sort is not a minor violation, the judicial board held, because it is a federal crime.

As we advised in July, the ethics law on the marijuana issue seems to be in a state of flux across the board. You are well-advised to follow developments in your own jurisdiction carefully, as well as keeping up to date on developments in the federal law.

The era of marijuana’s underground economy might be coming to an end. More than 20 states and the District of Columbia have legalized growing, processing, transporting, selling and/or using marijuana for medical purposes. Two states, Colorado and Washington, have also legalized recreational and personal use. The Department of Justice has made noises about backing off on prosecuting certain marijuana crimes.

As a result, there is a growing demand for legal services associated with the burgeoning marijuana industry. Possible players include

growers

retail sellers

lenders

tenants and landlords

technology inventors

equipment manufacturers.

Great news for a legal industry in the doldrums. Yippee! Hop on the gravy train!

Not so fast, you would-be rain makers. The grass is not always greener, and there are hazards for the unwary lurking among the weed(s). In the fog of all this pot-mania, it is easy to forget something significant about marijuana (I’m out of metaphors) — it’s still illegal.

Marijuana is a Schedule 1 drug, and possession, sale, and distribution are federal crimes. Therefore, conspiring with or aiding and abetting someone who possesses, sells or distributes marijuana is a crime under federal law.

So, if your legal services might be argued (by some zealous prosecutor) to constitute conspiring in or aiding or abetting a client in possessing, distributing or selling marijuana, you may be committing a federal conspiracy crime.

The looming ethical issue arises under Model Rule 1.2(d), which provides that a lawyer shall not “assist a client in conduct the lawyer knows is criminal or fraudulent.”

Against this backdrop, you must examine whether providing requested representation and advice in the “marijuana space” might constitute “assisting” in a violation of federal law, even in those state jurisdictions that have legalized the client’s activity under state law.

Likewise, if your legal assistance facilitates the possession or sale of marijuana in violation of federal criminal law, you may also be at risk of violating Model Rule 8.4(b) (professional misconduct to commit a criminal act that reflects adversely on the lawyer’s fitness) as well as Model Rule 8.4(d) (prohibiting engaging in conduct prejudicial to the administration of justice).

In an attempt to sort out the problem, four state authorities or bar associations issued ethics opinions. (Arizona, Colorado, Connecticut and Maine.) In May, Nevada amended the comments to its rules of professional conduct to allow lawyers to counsel clients on the state’s medical marijuana laws. Colorado also amended the comments to its rules.

The results of these efforts are inconsistent. Though several seem to permit some participation by lawyers, they do not appear to completely insulate lawyers from discipline. And lawyers still may face disciplinary action if the client conduct goes beyond what is permitted under state regulations.

Also, there can be additional issues raised by advising local businesses regarding their operations in other states that have different marijuana laws. Most authorities discern a critical distinction between on the one hand presenting a client with an analysis of the legal aspects of questionable conduct and on the other hand recommending the means by which a crime or fraud may be committed with impunity.

The take-away: This is still a developing area with some possible traps for the unwary. Keep aware of your state’s legal approach to the industry as well as the ethics opinions in your jurisdiction — more states will undoubtedly be formulating an approach that will possibly help dispel the smoke.

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